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Marriage Equality And The Tax Considerations

Marriage Equality and the Tax Considerations

Anyone who watches ABC’s Modern Family knows the delightful chaos that permeates the home of Mitchell and Cameron, married fathers whose personalities couldn’t be more different. The couple, who got married during the series’ fifth season, often depicts the hilarity of same-sex relationships and parenthood, with emotional Cameron the perfect foil for Mitchell’s buttoned-up style. But, what the show doesn’t depict is the complicated legal constructs that the couple would have needed in real life to protect their joint property and parenting rights before they got married. There are important tax considerations in the era of marriage equality.

Some states—including New York and New Jersey—allowed same-sex couples to marry before the 2015 Supreme Court ruling in Obergefell v. Hodges made marriage equality the law of the land. However, until that ruling, same-sex couples in a number of states were not permitted to marry and enjoy the more than 1,000 rights and responsibilities that come with tying the knot. Many were also relieved that the complex legal constructs that were often necessary to ensure that their rights, child custody, and property was protected and treated according to their wishes would soon become a thing of the past.

The law had an impact on many married same sex couples’ tax situations—and some still struggle with confusion today, especially with regard to tax filing. While couples in domestic partnerships or civil unions are not permitted to file their federal income taxes jointly, married couples had the right to do so, in addition to a host of other changes, including:

  • The portable estate tax exemption, which protects the married couple’s property from estate taxes when one spouse dies
  • A higher standard income tax deduction
  • The ability to claim various credits, such as the adoption credit and child dependent care credit as well as the American Opportunity and Lifetime Learning credits

These and the other benefits have the potential to deliver significant tax and other advantages. In some cases, the higher standard income tax deduction and estate tax exemption are important to the strategic design of many estate plans. In other cases, couples—especially child-free couples and those who have a significant pay disparity—filing married but separately may be a better option.


Source: BROOKINGS – Gay Marriage in America after Windsor and Obergefell; Fisher, Gee and Looney, February 28, 2018

Adoption and Same Sex Couples

Navigating the new legal landscape to your greatest advantage requires some forethought. For example, same- sex couples are four times more likely than other couples to adopt. However, spouses who adopt a husband or wife’ s child or children are not entitled to the adoption credit, which is $14,080 in 2019. Those planning on getting married and adopting a spouse’s child or children, may find it worthwhile to delay their nuptials and complete the adoption first to be eligible for the credit.

Legal Documents and Same Sex Couples

Married couples who have created complicated legal agreements to protect their rights, children, and property may wish to consult with their attorneys and ensure that these agreements are in alignment with their new rights. For example, marriage is a good time to revisit an estate plan and ensure that each person’s will, advance directives, and beneficiary designations reflect their wishes. Committed couples in domestic partnerships or civil unions may wish to consult with their tax and financial advisors to review the impact marriage may have, as well as how to best plan for their situations.

In this era of marriage equality, same-sex couples, particularly those who have been together for many years and may have complex financial situations or own businesses, should carefully consider marriage’s financial and legal impact. With some planning and the right advice, it’s possible to plan for “happily ever after” while also planning ahead to maximize benefits and mitigate potential negative effects.

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This article is not a substitute for personalized advice from RegentAtlantic. This article is current only as of the date on which it was sent. The statements and opinions expressed are, however, subject to change without notice based on market and other conditions and may differ from opinions expressed in other businesses and activities of RegentAtlantic. Descriptions of RegentAtlantic’s process and strategies are based on general practice and we may make exceptions in specific cases.

RegentAtlantic does not provide legal or tax advice. Please consult with a legal and or tax professional of your choosing prior to implementing any of the strategies discussed in this article.

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